NEW YORK (
fills his blog on
every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- why Hewlett-Packard is in trouble; and
- Salesforce.com's astounding quarter.
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H-P Is a Helpless Giant
Posted at 1:26 p.m. EST on Thursday, Feb. 23.
Lot of winners, one big loser. That's how I feel today about
(HPQ - Get Report)
, where virtually every division seems to be in free fall and the vultures are circling everywhere.
First, we tend to forget that Hewlett-Packard is huge, a $120-billion-in-sales company that has its tendrils deeply rooted in the corporate market, but also has a substantial consumer business through printers and personal computers.
Second, we tend to forget that companies can get in tailspins that they can't recover from. Witness the stunning declines in
Research In Motion
Third, Hewlett-Packard has a tremendous amount of debt and has used a gigantic amount of capital to foolishly buy back shares.
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Fourth, previous CEO Leo Apotheker spent money like a drunken sailor with a terrible $10 billion dollar overpay for an information management software company,
, that really drained the corporate coffers
Lastly, right before he was fired, Apotheker announced that Hewlett-Packard was debating abandoning the personal computer business.
Add these up and you have a company that seems about to be carved up by
on the underinvested consulting side, and by
and the low-cost Asian companies on the personal computer and printer side.
Enter Meg Whitman. While she has a pristine reputation, her actual operating history at previous employer
was distinctly mixed. She had grave troubles taking the company to the next level. She also made a serious mistake when she came in, casting an extremely rosy picture of the business before she even had a handle on it. The stock had crept up in part because we figured she had to know something about how well the company was doing or she would have kitchen-sinked, meaning taken huge writeoffs, cleaned up the biggest messes and given herself some time for this massive turnaround.